Posted by Alexander on 05/05/2021

What are independent examiners and when can my charity use them?

If you are a charity with an annual income of less than £1 million and assets of less than £3.26 million then you should consider using an independent examiner to prepare your annual accounts. Independent examination is designed by the Charity Commission to be a light touch (and good value) regulation appropriate to smaller charities who do not need to undertake a full audit. There are no formal qualifications required but your independent examiner does need to:

  • Be independent (e.g. not one of your trustees or your bookkeeper)
  • Understand their responsibilities as set out in the Guidance for independent examination of charity accounts
  • Know their way around charity accounts.  Or as the Charity Commission puts it ‘Understand the key governance and reporting requirements that are specific to charities’ and ‘have sufficient accounting skills to carry out an independent examination’

So how can you tell whether they know their way around charity accounts – and how can you prove to the outside world that you have checked? If you have an annual income of under £250,000 and choose to submit the most basic form of accounts – Receipts and Payments – then you simply need somebody who has experience of working with charity accounts.  This person should be able to demonstrate a track record of working with charities perhaps as an experienced bookkeeper or finance manager.

If you have an annual income of between £250,000 and £1 million, or if you choose to submit Accruals accounts, then your independent examiner must be a qualified accountant and a member of an accountancy body approved by the Charities Act (which includes most of the obvious bodies – I’ve added a full list below).

We have several independent examiners who will be able to help you .  Some work exclusively with charities who have annual incomes below £250,000; whilst others will work for all charities with annual income under £1 million.

Do get in touch with any of them if you would like help or have any questions.

One final consideration.  Some charities specify in their governing documents that they require a statutory audit, no matter what size they are.  So you will need to check this before proceeding with an independent examiner.

More information

There are two key (and very well written) Charity Commission documents:

Charity reporting and accounting: the essentials

Guidance on independent examination of accounts

And you can plug your details into this interactive form to find out what type of audit your charity needs.

Or look at our summary table:

Annual income

More than £3.26m Assets?

Type of accounts

Audit requirements

Up to £25,000

n/a

Receipts & Payments or Accruals

None required

Between £25,000 and £250,000

n/a

Receipts & Payments or Accruals

Independent examination

Between £250,000 and £1 million

Yes

Accruals

Statutory Audit

Between £250,000 and £1 million

No

Accruals

Independent examination

Over £1 million

n/a

Accruals

Statutory Audit

 

Finally, here is the list of approved accountancy bodies. You can check which of these bodies our Blumers belong to on their profile.

  • Institute of Chartered Accountants in England & Wales
  • Institute of Chartered Accountants of Scotland
  • Institute of Chartered Accountants in Ireland
  • Association of Chartered Certified Accountants
  • Association of Authorised Public Accountants
  • Association of Accounting Technicians
  • Association of International Accountants
  • Chartered Institute of Management Accountants
  • Institute of Chartered Secretaries and Administrators
  • Chartered Institute of Public Finance and Accountancy
  • Fellow of the Association of Charity Independent Examiners
  • Institute of Financial Accountants
  • Certified Public Accountants Association
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